The carnage began around 3:15 p.m. when it was reported that US environmental watchdog, the Environmental Protection Agency (EPA) intends to accuse the automaker of using engine management software to exceed diesel emissions in 104,000 vehicles. The EPA alleged that these violations of the Clean Air Act manifested themselves when FCA failed to disclose the existence of this software in its light-duty models in 2014 and 2015, the 2016 Jeep Grand Cherokee, and Doge Ram 1500 trucks. Shares were down 10% when markets closed. The EPA actions could result in fines of up to $4.6 billion for FCA as reported by the Wall Street Journal. Such a fine is more than the company’s combined profits from 2013 through to the first nine months of 2016.

This news comes in the wake of a deal between Volkswagen (VW) and the US Department of Justice (DOJ) in which the disgraced German automaker agreed to pay $4.3 billion in fines for rigging emissions tests on 580,000 of its vehicles sold in the US. As part of the deal, VW plead guilty to civil and criminal charges. On 9 January 2017, Oliver Schmidt, former head of VW’s environmental and engineering office in Michigan was arrested and charged with conspiracy to defraud the United States over the emissions scandal. Twelve other VW managers were indicted, five of which were in the United States. Notably absent from this list were the automaker’s former top brass such as former CEO Martin Winterkorn,former CFO and current Chairman Hans Dieter Pötsch, Audi chief Rupert Stadler, and Ulrich Hackenberg, the developer of the infamous EA 189 engine at the heart of the scandal. As one Forbes reporter aptly put it, “the DOJ is going after the soldiers, not the generals”.

Shareholders should note that VW was our worst-performing company in the Euro STOXX 600 for 2016, fetching an abysmal “F” rating due to severe deficiencies in their corporate governance practices. FCA was not far behind with a “D” rating.

Despite having an independent Board, FCA is controlled by Exor, the Agnelli Family’s investment vehicle with 29% of shares and 43% of votes. CEO Sergio Marchionne was by far the highest paid executive in Europe for 2016 taking home an astounding €65 million in total pay according to our most recent ECGS survey of CEO remuneration. This was by no means isolated to the year in question for Mr. Marchionne collected in 2014 €24.7 million in shares not subject to performance conditions, an extraordinary cash bonus of €38.6 million and an additional severance contribution of €12 million. These egregious amounts were granted partially as a reward for the creation of FCA, which essentially entailed moving the company from Italy to the Netherlands (establishing double voting rights in the process) and its tax residence to the United Kingdom. More troublingly, Agnelli Family scion John Elkann serves as executive chairman of FCA in direct contravention of company by-laws which state that the “chairman of the Board of Directors shall be a non-executive director”.

Exorbitant pay packages at FCA are reminiscent of Martin Winterkorn’s windfall prior to Dieslgate. The former VW chief collected €7.3 million in total pay in FY 2015 up until he resigned on 25 September 2015. In FY 2014 he was one of the highest paid CEOs in Germany earning almost €15.9 million. If history has taught us anything in the automobile industry, it’s that excessive CEO pay and a gaping lacuna in corporate governance appear to come hand in hand.

FCA categorically denied the EPA’s accusations and released a statement that it is looking forward to working with the incoming US administration to prove that it did not commit any wrongdoing.

As this investigation unfolds, time will tell if FCA will follow in the footsteps of its German rival to become one of the most despised companies of the year.

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